1. Unless the Parties agree otherwise, the panel shall, within 180 days after the chair is appointed, present to the Parties an initial report containing findings of fact, and its determination as to whether:
(a) the measure at issue is inconsistent with the obligations of this Agreement;
(b) a Party has otherwise failed to carry out its obligations under this Agreement; or
(c) the measure at issue is causing a nullification or impairment in the sense of Article 19.2(c); as well as any other determination requested by the Parties with regard to the dispute.
2. The panel shall base its report on the relevant provisions of the Agreement and the submissions and arguments of the Parties. The panel may, at the request of the Parties, make recommendations for the resolution of the dispute.
3. After considering any written comments by the Parties on the initial report, the panel may modify its report and make any further examination it considers appropriate.
4. The panel shall present a final report to the Parties within 45 days of presentation of the initial report, unless the Parties agree otherwise. The Parties shall release the final report to the public within 15 days thereafter, subject to the protection of confidential information.
Article 19.10. Implementation of the Final Report
1. On receipt of the final report of a panel, the Parties shall agree on the resolution of the dispute, which normally shall conform with the determinations and recommendations, if any, of the panel.
2. If, in its final report, the panel determines that a Party has not conformed with its obligations under this Agreement or that a Party's measure is causing nullification or impairment in the sense of Article 19.2(c), the resolution, whenever possible, shall be to eliminate the non-conformity or the nullification or impairment.
Article 19.11. Non-implementation
1. If a panel has made a determination of the type described in Article 19.10.2, and the Parties are unable to reach agreement on a resolution pursuant to Article 19.10.1 within 45 days of receiving the final report, or such other period as the Parties agree, the Party complained against shall enter into negotiations with the other Party with a view to developing mutually acceptable compensation.
2. If the Parties:
(a) are unable to agree on compensation within 30 days after the period for developing such compensation has begun, or
(b) have agreed on compensation or on a resolution pursuant to Article 19.10.1 and the complaining Party considers that the other Party has failed to observe the terms of the agreement,
the complaining Party may at any time thereafter provide written notice to the other Party that it intends to suspend the application to the other Party of benefits of equivalent effect. The notice shall specify the level of benefits that the Party proposes to suspend. Subject to paragraph 5, the complaining Party may begin suspending benefits 30 days after the later of the date on which it provides notice under this paragraph or the panel issues its determination under paragraph 3, as the case may be.
3. If the Party complained against considers that:
(a) the level of benefits that the other Party has proposed to be suspended is manifestly excessive; or
(b) it has eliminated the non-conformity or the nullification or impairment that the panel has found,
it may, within 30 days after the complaining Party provides notice under paragraph 2, request that the panel be reconvened to consider the matter. The Party complained against shall deliver its request in writing to the other Party. The panel shall reconvene as soon as possible after delivery of the request and shall present its determination to the Parties within 90 days after it reconvenes to review a request under subparagraph (a) or (b), or within 120 days for a request under subparagraphs (a) and (b). If the panel determines that the level of benefits proposed to be suspended is manifestly excessive, it shall determine the level of benefits it considers to be of equivalent effect.
4. The complaining Party may suspend benefits up to the level the panel has determined under paragraph 3 or, if the panel has not determined the level, the level the Party has proposed to suspend under paragraph 2, unless the panel has determined that the Party complained against has eliminated the non-conformity or the nullification or impairment.
5. The complaining Party may not suspend benefits if, within 30 days after it provides written notice of intent to suspend benefits or, if the panel is reconvened under paragraph 3, within 20 days after the panel provides its determination, the Party complained against provides written notice to the other Party that it will pay an annual monetary assessment. The Parties shall consult, beginning no later than ten days after the Party complained against provides notice, with a view to reaching agreement on the amount of the assessment. If the Parties are unable to reach an agreement within 30 days after consultations begin, the amount of the assessment shall be set at a level, in U.S. dollars, equal to 50 percent of the level of the benefits the panel has determined under paragraph 3 to be of equivalent effect or, if the panel has not determined the level, 50 percent of the level that the complaining Party has proposed to suspend under paragraph 2.
6. Unless the Joint Committee decides otherwise, a monetary assessment shall be paid to the complaining Party in U.S. currency, or in an equivalent amount of Bahraini currency, in equal, quarterly installments beginning 60 days after the Party complained against gives notice that it intends to pay an assessment. Where the circumstances warrant, the Joint Committee may decide that an assessment shall be paid into a fund established by the Joint Committee and expended at the direction of the Joint Committee for appropriate initiatives to facilitate trade between the Parties, including by further reducing unreasonable trade barriers or by assisting a Party in carrying out its obligations under the Agreement.
7. If the Party complained against fails to pay a monetary assessment, the complaining Party may suspend the application to the Party complained against of benefits in accordance with paragraph 4. 8. This Article shall not apply with respect to a matter described in Article 19.12.1.
Article 19.12. Non-implementation In Certain Disputes
1. If, in its final report, a panel determines that a Party has not conformed with its obligations under Article 15.2.1(a) (Application and Enforcement of Labor Laws) or Article 16.2.1(a) (Application and Enforcement of Environmental Laws), and the Parties:
(a) are unable to reach agreement on a resolution pursuant to Article 19.10.1 within 45 days of receiving the final report; or
(b) have agreed on a resolution pursuant to Article 19.10.1 and the complaining Party considers that the other Party has failed to observe the terms of the agreement, the complaining Party may at any time thereafter request that the panel be reconvened to impose an annual monetary assessment on the other Party. The complaining Party shall deliver its request in writing to the other Party. The panel shall reconvene as soon as possible after delivery of the request.
2. The panel shall determine the amount of the monetary assessment in U.S. dollars within 90 days after it reconvenes under paragraph 1. In determining the amount of the assessment, the panel shall take into account:
(a) the bilateral trade effects of the Party's failure to effectively enforce the relevant law;
(b) the pervasiveness and duration of the Party's failure to effectively enforce the relevant law;
(c) the reasons for the Party's failure to effectively enforce the relevant law;
(d) the level of enforcement that could reasonably be expected of the Party given its resource constraints;
(e) the efforts made by the Party to begin remedying the non-enforcement after the final report of the panel; and
(f) any other relevant factors. The amount of the assessment shall not exceed 15 million U.S. dollars annually, adjusted for inflation as specified in Annex19-A.
3. On the date on which the panel determines the amount of the monetary assessment under paragraph 2, or at any other time thereafter, the complaining Party may provide notice in writing to the Party complained against demanding payment of the monetary assessment. The monetary assessment shall be payable in U.S. currency, or in an equivalent amount of Bahraini currency, in equal, quarterly installments beginning 60 days after the complaining Party provides such notice.
4. Assessments shall be paid into a fund established by the Joint Committee and shall be expended at the direction of the Joint Committee for appropriate labor or environmental initiatives, including efforts to improve or enhance labor or environmental law enforcement, as the case may be, in the territory of the Party complained against, consistent with its law. In deciding how to expend monies paid into the fund, the Joint Committee shall consider the views of interested persons in each Party's territory.
5. If the Party complained against fails to pay a monetary assessment, and if the Party has created and funded an escrow account to ensure payment of any assessments against it, the other Party shall, before having recourse to any other measure, seek to obtain the funds from the account.
6. If the complaining Party cannot obtain the funds from the other Party's escrow account within 30 days of the date on which payment is due, or if the other Party has not created an escrow account, the complaining Party may take other appropriate steps to collect the assessment or otherwise secure compliance. These steps may include suspending tariff benefits under the Agreement as necessary to collect the assessment, while bearing in mind the Agreement's objective of eliminating barriers to bilateral trade and while seeking to avoid unduly affecting parties or interests not party to the dispute.
Article 19.13. Compliance Review
1. Without prejudice to the procedures set out in Article 19.11.3, if the Party complained against considers that it has eliminated the non-conformity or the nullification or impairment that the panel has found, it may refer the matter to the panel by providing written notice to the other Party. The panel shall issue its report on the matter within 90 days after the Party complained against provides notice.
2. If the panel decides that the Party complained against has eliminated the nonconformity or the nullification or impairment, the complaining Party shall promptly reinstate any benefits it has suspended under Article 19.11 or 19.12 and the Party complained against shall no longer be required to pay any monetary assessment it has agreed to pay under Article 19.11.5 or that has been imposed on it under Article 19.12.
Article 19.14. Five-year Review
The Joint Committee shall review the operation and effectiveness of Articles 19.11 and 19.12 not later than five years after the Agreement enters into force, or within six months after benefits have been suspended or monetary assessments have been imposed in five proceedings initiated under this Chapter, whichever occurs first.
Article 19.15. Private Rights
Neither Party may provide for a right of action under its law against the other Party on the ground that a measure of the other Party is inconsistent with this Agreement.
Chapter Twenty. Exceptions
Article 20.1. General Exceptions
1. For purposes of Chapters Two through Seven (National Treatment and Market Access for Goods, Textiles and Apparel, Rules of Origin, Customs Administration, Sanitary and Phytosanitary Measures, and Technical Barriers to Trade), Article XX of GATT 1994 and its interpretive notes are incorporated into and made part of this Agreement, mutatis mutandis. The Parties understand that the measures referred to in Article XX(b) of GATT 1994 include environmental measures necessary to protect human, animal, or plant life or health, and that Article XX(g) of GATT 1994 applies to measures relating to the conservation of living and non-living exhaustible natural resources.
2. For purposes of Chapters Ten, Twelve, and Thirteen (1) (Cross-Border Trade in Services, Telecommunications, and Electronic Commerce), Article XIV of GATS (including its footnotes) is incorporated into and made part of this Agreement, mutatis mutandis. The Parties understand that the measures referred to in Article XIV(b) of GATS include environmental measures necessary to protect human, animal, or plant life or health.
Article 20.2. Essential Security
Nothing in this Agreement shall be construed:
(a) to require a Party to furnish or allow access to any information the disclosure of which it determines to be contrary to its essential security interests; or
(b) to preclude a Party from applying measures that it considers necessary for the fulfillment of its obligations with respect to the maintenance or restoration of international peace or security or the protection of its own essential security interests.
Article 20.3. Taxation
1. Except as set out in this Article, nothing in this Agreement shall apply to taxation measures.
2. Nothing in this Agreement shall affect the rights and obligations of either Party under any tax convention. In the event of any inconsistency between this Agreement and any such convention, that convention shall prevail to the extent of the inconsistency. In the case of a tax convention between the Parties, the competent authorities under that convention shall have sole responsibility for determining whether any inconsistency exists between this Agreement and that convention.
3. Notwithstanding paragraph 2:
(a) Article 2.2 (National Treatment and Market Access for Goods – National Treatment) and such other provisions of this Agreement as are necessary to give effect to that Article shall apply to taxation measures to the same extent as does Article III of GATT 1994; and
(b) Article 2.10 (National Treatment and Market Access for Goods – Export Taxes) shall apply to taxation measures.
4. Subject to paragraph 2:
(a) Article 10.2 (Cross-Border Trade in Services – National Treatment) and Article 11.2 (Financial Services – National Treatment) shall apply to taxation measures on income, capital gains, or on the taxable capital of corporations that relate to the purchase or consumption of particular services, except that nothing in this subparagraph shall prevent a Party from conditioning the receipt or continued receipt of an advantage relating to the purchase or consumption of particular services on requirements to provide the service in its territory; and
(b) Articles 10.2 (Cross-Border Trade in Services – National Treatment) and 10.3 (Cross-Border Trade in Services – Most-Favored-Nation Treatment) and Articles 11.2 (Financial Services – National Treatment) and 11.3 (Financial Services – Most-Favored-Nation Treatment) shall apply to all taxation measures other than those on income, capital gains, or on the taxable capital of corporations, taxes on estates, inheritances, gifts, and generation-skipping transfers,
except that nothing in those Articles shall apply:
(c) any most-favored-nation obligation with respect to an advantage accorded by a Party pursuant to a tax convention;
(d) to a non-conforming provision of any existing taxation measure;
(e) to the continuation or prompt renewal of a non-conforming provision of any existing taxation measure;
(f) to an amendment to a non-conforming provision of any existing taxation measure to the extent that the amendment does not decrease its conformity, at the time of the amendment, with any of those Articles;
(g) to the adoption or enforcement of any taxation measure aimed at ensuring the equitable or effective imposition or collection of taxes (as permitted by Article XIV(d) of GATS); or
(h) to a provision that conditions the receipt, or continued receipt, of an advantage relating to the contributions to, or income of, pension trusts or pension plans on a requirement that the Party maintain continuous jurisdiction over the pension trust or pension plan.
Article 20.4. Disclosure of Information
Nothing in this Agreement shall be construed to require a Party to furnish or allow access to information the disclosure of which would impede law enforcement or would be contrary to the Party's law protecting personal privacy or the financial affairs and accounts of individual customers of financial institutions.
Chapter Twenty One. Final Provisions
Article 21.1. Annexes
The Annexes to this Agreement constitute an integral part of this Agreement.
Article 21.2. Amendments
The Parties may agree, in writing, to amend this Agreement. An amendment shall enter into force after the Parties complete any necessary approval procedures, on such date as the Parties may agree.
Article 21.3. Amendment of the Wto Agreement
If any provision of the WTO Agreement that the Parties have incorporated into this Agreement is amended, the Parties shall consult to consider amending the relevant provision of this Agreement, as appropriate, in accordance with Article 21.2.
Article 21.4. Expansion of the Free Trade Area
1. Any country or group of countries may agree to become a Party to this Agreement, subject to such terms and conditions as may be agreed between such country or countries and the Parties and following approval in accordance with the applicable legal requirements and procedures of each country.
2. This Agreement shall not apply as between any Party and any country or group of countries if, at the time of the agreement described in paragraph 1, one of them does not consent to such application.
Article 21.5. Entry Into Force and Termination
1. This Agreement shall enter into force 60 days after the date on which the Parties exchange written notifications certifying that they have completed their respective applicable legal requirements and procedures or such other date as the Parties may agree.
2. Either Party may terminate this Agreement on 180-days written notice to the other Party.
Conclusion
IN WITNESS WHEREOF, the undersigned, being duly authorized by their respective Governments, have signed this Agreement in duplicate, in the English and Arabic languages, each text being equally authentic.
DONE at Washington, D.C., this fourteenth day of September, 2004
FOR THE GOVERNMENT THE UNITED STATES OF AMERICA
FOR THE GOVERNMENT OF THE KINGDOM OF BAHRAIN